Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Quad/Graphics Fourth Quarter 2013 Conference Call. [Operator Instructions] I will now turn the conference call over to Mr. Kelly Vanderboom, Vice President and Treasurer of Quad/Graphics. Kelly, please go ahead.

Thank you, operator, and good morning, everyone. With me today are Joel Quadracci, our Chairman, President and Chief Executive Officer; John Fowler, incoming Vice Chairman and Executive Vice President; and Dave Honan, incoming Vice President, and Chief Financial Officer. Joel will lead off today with an overview of our financial highlights and then provide us summary of our key focus areas. John will follow with a more detailed review of our fourth quarter and full year 2013 financial results, followed by a summary of our 2014 guidance by Dave Honan. With the exception of certain debt ratios, prior year financial results do not include the acquisition of Vertis. All actual 2013 results include Vertis from the day of acquisition on January 16, 2013. I would like to remind everyone that this call is being webcast, and forward-looking statements are subject to Safe Harbor provisions as outlined in our quarterly news release and in today's slide presentation. Our financial results are prepared in accordance with Generally Accepted Accounting Principles. However, this presentation also contains non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, recurring free cash flow, and debt leverage ratio. We have included in the slide presentation reconciliations of these non-GAAP financial measures to GAAP financial measures. In addition, we are amending our non-GAAP financial measures to now include free cash flow as opposed to recurring free cash flow. Free cash flow is defined as net cash provided by operating activities, including pension contributions less purchases of property, plant and equipment. In speaking with our investors, it is clear, there is a preference for repeating or recording free cash flow. We believe that this is an applicable measure moving forward as it provides a true picture of cash available to fund our key strategic initiatives reduced at pension liabilities and return capital to our shareholders. The slide presentation can be accessed through a link on the Investor Relations section of the Quad/Graphics' website. There are also detailed instructions on how to access the slide presentation in our fourth quarter earnings news release, issued last evening. A replay of the call will also be posted on the Investor Relations section of our website after the live call concludes today. I will now turn the call over to Joel.

Thanks, Kelly, and good morning, everyone. I am pleased to report that our performance was in line with our expectations. Full year 2013 net sales were $4.8 billion, as expected. Volume, price and revenue were in line with our fourth quarter expectations and due to a focused effort to improve productivity and aggressively manage cost, we saw sequential improvement over our third quarter performance. This resulted in 2013 full year adjusted EBITDA of $577 million. Our ability to generate strong free cash flow is critical to the success of our capital deployment strategy. I'm pleased to report that our 2013 annual recurring free cash flow of $380 million met our reported guidance of in excess of $360 million, continuing our track record of solid and consistent cash flow generation. As Kelly noted, we are amending our non-GAAP financial measures to now include free cash flow as opposed to recurring free cash flow, and John will speak to this transition later in the call. As always, we remain flexible and opportunistic in terms of our future plans for capital deployment, which include balancing our key priorities to invest in our business, pursue compelling acquisition opportunities, reduce debt and pension liabilities and return capital to our shareholders. During the year, we reduced our pension obligations by $191 million and since the close of Worldcolor acquisition in 2010, by a total of $360 million. I am pleased to report that we have met our 2013 year-end goal of reducing our underfunded pension liabilities, including multiemployer pension plans to less than $200 million. In addition, after the acquisition of Vertis, we continue to reduce our debt and as of December 31, 2013, our debt leverage ratio decreased to 2.44x within our targeted range of 2x to 2.5x. Slide 4 is a snapshot of our…

Thanks, Joel, and good morning, everyone. Slide 6 is a snapshot of our fourth quarter 2013 financial results, including Vertis as compared to our fourth quarter 2012 results. Net sales were $1.3 billion as compared to $1.1 billion, representing a 19% increase due to the Vertis acquisition. If we look at the Vertis business as if we acquired it at the beginning of 2012, our pro forma consolidated net sales declined approximately 5%, of which we estimate Vertis represented nearly 1/2 of this decrease. The remaining decline related to our core business and reflects top line challenges from ongoing industry pressures. Overall, this variance is in line with our net sales expectations for the quarter. Cost of sales is $1 billion as compared to $872 million. SG&A expense was $103 million as compared to $87 million. Depreciation and amortization was $82 million as compared to $86 million. Restructuring, impairment and transaction-related charges were $12 million in 2013, which included $1 million of noncash charges. In comparison, restructuring, impairment and transaction-related charges were $31 million in 2012, which included $9 million of noncash charges. Excluding the noncash amounts, restructuring, impairment and transaction-related charges for the fourth quarter decreased from $22 million in 2012 to $11 million in 2013. Interest expense was $21 million as compared to $20 million. Our adjusted EBITDA was $198 million as compared to $174 million. Our adjusted EBITDA margin was 14.7% as compared to 15.3%. Our adjusted EBITDA margin reflects the hard work of many to overcome the impact of ongoing industry pricing and volume pressure and Vertis' historical lower margin profile. As Joel mentioned, we are proud of our consistent recurring free cash flow, and the work we are doing to maintain a strong and flexible balance sheet. Our recurring free cash flow was $380 million…

Thank you, John, and good morning, everyone. Slide 11 is the summary of our 2014 guidance. The assumptions impacting our earnings guidance for 2014 are as follows: First, as Joel discussed in his opening remarks, we expect industry pricing pressure to continue in 2014. Part of the price impact in 2014 resulted from our renewal of a larger-than-normal number of multiyear magazine and catalog customer contracts in 2013. The value of the contracts renewed in 2013 were twice as large as our typical renewal year, and will impact pricing throughout 2014. We will have a significant step-down in exposure on multiyear contract renewals over the next couple of years. Including the impact of the 2013 contract year renewals, we believe pricing will negatively impact our net sales by 1% to 2%, which is consistent with our prior year guidance. Had we not have the larger-than-normal renewals, pricing would have trended below the low end of our range. Second, we believe that the exigent postal rate increase will have a negative impact on volumes, primarily in the second half of 2014 for products distributed through the mail. We have assumed a decrease in volume of approximately 2% of our mail products, which includes catalogs. However, the actual impact on volumes is unknown at this point. Finally, as John mentioned, we had $19 million of favorable event-driven impact that occurred in 2013 that will not repeat in 2014. With that said, we anticipate our net sales to be in a range of $4.6 billion to $4.8 billion. In addition, we expect 2014 adjusted EBITDA to be between $520 million and $550 million, and 2014 free cash flow to be between $155 million and $165 million. As mentioned earlier on the call, the company is amending its non-GAAP financial measures to report free…

Thanks, Dave, and congratulations on your expanded role. I would also like to congratulate and thank John Fowler who is transitioning to Vice Chairman and Executive Vice President after serving as our CFO for 34 years. Throughout all these years, John has been instrumental in developing, implementing and financing the company's profitable growth, both domestically and abroad. Going forward, John will be responsible for global strategic planning and business development. He will continue to be intimately involved in day-to-day operations, but with a concentrated focus on overall business strategy and investment opportunities that will drive our company's long-term success and ensure industry-leading position. This has been a long planned succession strategy that begun roughly 8 years ago, and his ongoing strategic role at the company will ensure a smooth transition on its financial responsibilities. I would now like to turn the call back to the operator who will facilitate taking your questions. Operator?

[Operator Instructions] And your first question comes from the line of Haran Posner.

So a few questions for me, maybe just I'll start with your guidance. And, maybe you did give us some color, I think, you ran us through some of the numbers fairly quick. I just wanted to confirm, first with respect to EBITDA. I think, John you alluded to, correct me if I'm wrong, $19 million of sort of onetime benefits in '13 that will not occur next year. Can you just give us a little bit more color on that?

Sure, Haran. This is Dave. From a nonrecurring standpoint, we had several event-driven things that happened in 2013 that won't repeat in '14. We -- as part of the restructuring activities, we've sold off a lot of vacant facilities. Assigned with those vacant facilities were some environmental issues that freed up some reserve related to environmental reserves around that we sold those, that's the largest piece of the difference we're talking about. There was also some event-driven activities with legal and bankruptcy matters related to the Worldcolor bankruptcy, in which we assumed as part of that acquisition. There was a lot of resolution on that, and that freed up some of the bankruptcy and legal reserves associated with that. I think, finally, the other major component of that was a sale of our business that we had in Recife, Brazil to the existing joint venture we have in Brazil, and that accounted for a gain that came through in 2013. Those items won't repeat in '14, but that made up the bulk of what that $19 million is all about.

And just to clarify, David, I mean those $19 million, that's all in the EBITDA?

That is all in EBITDA.

Okay, all right. And then another question on the USPS and, I think, you gave us some good color there in terms of your underlying assumptions, I guess, in your guidance. I just wanted to clarify with the postage rate increase. For you guys, obviously, there is risk to volume, but you do pass that cost through to your customers. Is that correct?

Yes, that's correct. That's incurred by them.

Okay. So potentially, you could see, I guess, this been a short-term positive from a revenue standpoint and a negative for margin?

No, it doesn't go through our revenue line. It's actually the customer is being billed directly from the USPS. What we do for the customers to mitigate this stuff is we perform the co-mailing and distribution function where we try and skip most of the post office to provide them with the most efficient way to hand it off the post office, but ultimately, the postage bill is billed directly to them, and not through us.

Yes. Haran, our point in our guidance was that we expect, every time, the USPS would take a large increase in the postal rates, that's going to impact ultimately what our customers put through the mail, and would impact our ultimate printing volumes, but what Joel was referring to is we've got strategies to help our customers offset that increase postage cost through our co-mailing and co-mingling operation.

Got it. And, maybe just when I look down the guidance items in -- on free cash flow and most of them came in a little bit worse than I had expected and maybe that's my fault but, I guess, I'm just wondering, not sure there's another way to ask is there sort of a degree of conservatism that you feel that you built into this guidance for next year?

We think, the guidance is adequate. I don't think I'd call it conservative. I think, it's typical and consistent with how we've guided in the past. I know there's been some reaction to free cash flow, but on an apples-to-apples basis, it's important to go through this because we made that change to how we define free cash flow rather than recurring free cash flow. If you get on an apples-to-apples basis, 2013's free cash flow was $202 million, and we're guiding to the mid range of 160 if you took the middle of that range. The decreases in the free cash flow is really going to be aligned with what you see and the decrease in our adjusted EBITDA range. We will have larger CapEx expenditures. We will have larger taxes, cash taxes, but that's offset within lower cash restructuring needs as we've gotten through the bulk of our restructuring associated with the acquisition activity that's come through with the largest being that of Vertis. So as we look forward, if you look at the trends in that free cash flow, also it's important to note that there will be some decreasing cash needs related to a couple of areas, the largest of which was -- is the pension plan. We think, we're at a height now on cash contribution, so we continue to see the cash contributions associated with pension plan come down in the future along with -- we're probably at a height on CapEx. If you look at a 3-year historical average for our CapEx, we're above that. We expect to come more back to a normalized historical level on CapEx. So those are some positive factors impacting cash flows, moving forward.

This is Joel. Let me also just further comment and point out because this is important for people to understand this that the guidance on the EBITDA range being lower, a very significant factor in that is the fact that with long-term contracts, every year you have a certain portion of your portfolio that gets repriced in that year for the following years. And, in 2013, we had a significantly large portion compared to what we normally experience that came up for repricing. It was more than twice what we usually experience. And, so that being said, they got repriced last year, but that impact is in '14 and beyond. So we kind of know that. If you would have taken out the noise of that, and it had a more normalized contract renewal rate, the actual pricing reduction that we would've seen would have been under the low end of our range of 1% to 2%. And, as we go forward in 2014, the amount of those long-term contracts that are facing potential repricing is 50% of what it was in 2013, and so that would sort of speak to that -- it was sort of an abnormal year for repricing, and so that's why when you look at the drop in EBITDA, a huge part of that is the repricing of that portion.

And, that's very, very helpful, Joel. And maybe just a follow-up on that. In these contracts, can you help me understand, there are sort of inflation clauses in them, going forward, after the reprice happens?

Yes, it kind of ranges all over. Typically, it's some sort of -- and it depends on the product type and the degree of difficulty going through the plant and the degree of exposure to cost and things like that, but typically, it's associated with what happens with CPI. Some other things, such as freight and even ink and materials isn't CPI. It's more based on pass-through, but in terms of the normal running of our business, it's typically some sort of linkage to CPI.

Okay, that's great. And then just maybe pursuing the CapEx issue and, I guess, also an item that was harder than I expected and you're saying a sort of at a height at this point. I'm just wondering if there is sort of you can help us with guidance, going forward, and maybe as a CapEx intensity number, a percentage of revenue that you would expect, and I guess the reason I ask is Donnelley had their Investor Day, yesterday, and I don't cover that company, but it seems like the CapEx intensity guidance that they provided, specifically in the business lines that, I think, you guys are in, seems a little bit lower, and so, I guess, I'm just wondering, if you can help us with going forward what we should expect.

Absolutely. And, we've historically been higher than Donnelley in which we invest back into our platforms of being an organically grown company up through 3 years or 3 or 4 years ago. When you look at what we spend on capital expenditures, we spend about 3% of our top line on CapEx and that's what you see in the guidance for 2014. If you broke that down, 1.5% to 2% of that is maintenance CapEx. So, if we were to need to fluctuate, we could pull that down a bit and 1% approximately is for growth CapEx in our business. So, we continually balance that, we look at what the growth and productivity needs are for our platform and continue to make decisions that are right balanced approach to how we position our business, going forward, as a low-cost producer.

And, some of that CapEx, you think about the needs of our clients, they need us to be able to do more variable printing. They need us to increase the amount of co-mailing we can do, and so we continue to invest in the things that our customers need.

Okay, that's all very helpful, and one other question with respect to, I guess, Donnelley's purchase of Consolidated Graphics. I'm wondering if this consolidation creates any opportunities for you in that particular space that you can see.

Well, I don't know that, I mean, sure, it's a competitive market out there, but, I think, that's an example of the tipping point the industry is going through. You had us with Worldcolor, you've had us with Vertis, Donnelley's consolidating with Consolidated Graphics, but we've been building around our commercial platform for a while now, just after we did Worldcolor, we acquired a commercial printer not as large as CGX, but over time here, we've been building that around the needs of our clients and UniGraphic is an example of that. Again, I think, it's more for us the opportunity is the stuff we hear our customers talk about, which is -- help us navigate this new media landscape, as we go forward in commercial and in-store and all the things that our platform brings to us is been the result of the acquisitions that we do, but the result of what they're asking us to do. So yes, we play in the same spaces, but, I think, that it's pretty much everyone is kind of focusing on the customer's needs.

Appreciate that. John, maybe just last one for me here. With respect to the recently announced management changes that you alluded to. Obviously, all sounds like a natural transition within the company. I guess, just the one question here that I have and, I think, I know the answer, but you did create a new role for a Chief Operating Officer and, I guess, I just wanted to hear from you, Joel, that really you are in no way kind of stepping back from the business here and sort of continue to be very involved.

Why would I want to leave 2 degrees in Wisconsin today? No. Look, it's a natural evolution of our business. Some of the changes I made was just a natural timing point of being able to align and provide the focus to the different business segments that we've been in. In -- the biggest part of our business, which would be retail and then publication and catalog, we've all been very involved in it, it's a matrixed organization because that's where all the integration is taking place or most of it. And, so now that we're predominantly beyond the halfway point of the Vertis integration, and we've done all the work on Worldcolor, it was a good opportunity now to sort of align and have GMs be put in place to focus on those 2 as we kind of go forward. The chief operating role is little bit boiled frog routine as well, as Tom Frankowski who is been a long-time partner of mine who has been running the manufacturing side for the business because as we had so many moving parts, but it's a natural point now for me to kind of hand over more responsibility on the core print product lines because as goes the sort of core, our ability to continue to be low-cost producer there helps us fuel the other things that we're doing in the business. And, so I really wanted to make sure that we have the right focus in the core and also make sure that I have the time and ability to look at where do we deploy that capital. And, so I've been spending a lot of time on obviously looking at the potential of consolidating acquisitions or new opportunities in things, such as packaging when we talked about Proteus and a little sleeper thing that we have, which has been a real help for our shareholders by reducing our health care cost to our employees as QuadMed, which happens to be in an area that the world is being disrupted and that's health care, and so we've actually been growing that business on the outside. And, then we're going to continue to have opportunities around the world. So, it's really -- we're almost a $5 billion company now, and it was a recognition on my side that I want to make sure I have the right focuses in the right place, and then make sure I'm focused in the right place for our shareholders' growth to really deploy that capital and continue to have a very long-term approach here. But, no, I'm definitely not going anywhere, I'm a big shareholder of this company. And, I've got 2 sisters and a brother to keep happy along with 25,000 employees. And so, no, this was all about the next evolution in our company.

Your next question comes from the line of Jamie Clement. James Clement - Sidoti & Company, LLC: A list of random assembly somewhat related questions. On the third quarter call and press release, you called out Vertis as being not quite where you thought it might be when you started the year. Not a lot of commentary in print, not a lot of commentary about Vertis in your prepared remarks. Can I ask for an update there in terms of how that business is doing vis-à-vis expectations, let's say 12 months ago?

And, just to clarify, in third quarter, what we have been talking about was not whether or not the acquisition was living up to expectations, it was production in the platform. And, what we knew as we did the Worldcolor deal that had gone through bankruptcy and came out and Vertis obviously -- this was their third bankruptcy, and so leading up to the stuff, one of the things that people really pulled back on is maintenance of the platform. And, so as you recall, we closed the deal in second week of January last year, and so right away as soon as we closed and cleared HSR all that stuff, we've really hit the ground hard to try and bring those presses -- that equipment up to speed which requires us to really kind of make up for several years of only fixing things when they break. The way we operated is about total productive maintenance, which means that you schedule in maintenance time so that when you are running and you need the equipment to run, it's not breaking. So, we could -- we got a lot of work done in the first part of the year, but as we got to the busy season, you sort of have to stop because that's -- especially in retail it's very back-half-focused, the platform gets loaded up to a high capacity utilization. And, what happened in the third quarter, as we started to see the results of not being able to be at the place we wanted to be, given if we were given more time before the busy season. So, we had a lot of equipment kind of breaking down and what that does is it causes snowball effect where you have to expedite shipping, you need to ship things around. And, so as you kind of look at the fourth quarter, we really got to a point where that stuff worked itself through the system and in third quarter, I think, we said that we're doing a lot of work to try to improve the situation and that actually happened. And, so now we feel that we're in a much better place. Actually, in fourth quarter, we were in a much better place of being able to perform without added cost, and on a go forward basis, we continued now to go with our regular systemic program of upgrading the capacity, so that come busy season next year, we don't have the same issues. James Clement - Sidoti & Company, LLC: And, when you say upgrading the capacity, are you talking about cherry picking equipment as sort of the phrase you used a couple of years ago with respect to Worldcolor, you're not talking about substantial additional capital investments, are you?

No. I think, no, I mean there's some here and there. I mean, we've created capabilities for retail and plants that previously didn't do retail because that helps our customers, but mostly as we've closed some plants and consolidated equipment to other facilities, good equipment, we're continuing on with that. When I talk about sort of bringing the platform up to speed, it's really about making sure that we catch up on all the maintenance issues and have the right equipment there. So now, it's not like an increase in capital expenditure outside what the guidelines... James Clement - Sidoti & Company, LLC: Yes, no, yes, it didn't sound like that. Okay. Joel, one of the things about -- and, I think, you all report a little bit on the late side as far as earnings seasons goes and, I think, one of the things, one of the big stories of this earnings season has been how lousy commentary from major retailers have been. And, from a modeling perspective or just from an expectation perspective, we all know that your first half is obviously tremendously seasonally weaker than your second half. But, I know you came from the sales channels within Quad and obviously, you talk to large customers all the time, you served many different industries, but in commercial printing, in general, retail is very important. Have you seen evidence of a knee-jerk pullback in ad spending whether this is weather-related, whether it's an overrated consumer economy, we'll find out in a couple of months, but the fact is that numbers have been bad generally speaking out of retail, what are your thoughts as a printer for some of those companies?

Well, we don't get too concerned about quarter-by-quarter because we really run this business for the longer-term but... James Clement - Sidoti & Company, LLC: Sometimes, I think they do, though. That's my question.

They do, but they still have to drive store traffic and print continues to be one of the main ways that they do drive store traffic. I do come from sales, I spent a lot of time in the marketplace in fact, I was down in Florida with 2 major retailers yesterday and their commentary is anecdotally them and others that I've heard is there's just a lot of pressure on the consumer with additional costs, I mean, the weather, I mean, it's so cold here. I actually grew a beard to stay warm, but, they've got increased energy cost, they've got increased food costs these days. In the reality is this your average consumer out there hasn't been afforded huge wage increases over the last several years because of the slow growth economy, and so we do hear that the consumer is a bit finicky even into the grocery store side where they're not buying the nice to have as much anymore either, but again the way we view retail and why we like what we've done here is it's an area that's being disrupted, they're trying to figure it out, it's an area that continues to use print as being one of its most effective ways to drive store traffic, and it's an area where our customers clearly have told us that they need help connecting all the dots in all the different mechanisms that they do. A lot of people when you talk to them about video these days they're like, yes, we just don't have a strategy, and its like we point out to them that, that's one of the fastest-growing marketing mediums with YouTube, which is why we've invested in that. And so, I think, when you got customers under pressure and you've got a…

Well, number one, what we've seen in the past is generally a lag because they have existing plans to market and sell product that they've already purchased. So we tend to have see it doesn't have an immediate effect, and that's why, I think, Dave talked about... James Clement - Sidoti & Company, LLC: The second half.

In Seen in the second half. Secondly, it's not going to be to their core customers that our regular buyers, it's going to have a bigger impact on who they're prospecting to because they run very sophisticated models that allow them to see what are they getting a return on based upon the product being sold and the mailing list to whom it's gone to. There's not a great statistics in the past because we've had such a bumpiness. Last time was 2007, and we saw a large increase that probably ranged from 15% to 25% or 30%. So what huge is compared to the 6%. It was done in May of 2007, so we didn't see anything until 2008 and then we're frankly headed into a recession. So, I mean, I think, this is lower than what it's been in the past, but it is going to impact our volumes and so our best estimate is we looked at our mailable product that Dave shared was the 2% based upon our history, but we had these dramatic swings from being very high at this 15% to 25%, 30% or down sort of that the 2%, which makes it difficult to estimate though we took our best shot at what we think is going to impact us this year.

There are no further questions at this time.

Okay. Well, thank you all, and we will see you next quarter.